Thursday, September 1, 2011

NJEA Sues State over Pension/Benefits Reform

The New Jersey Education Association has filed suit in federal court to overturn the State Legislature’s pension and health benefits premium contributions reform bill. The suit also seeks to overturn the revocation of cost-of-living adjustments for retirees’ pensions until NJ’s pension fund is solvent, which will take about 30 years. The Communications Workers of America joined in the suit.

Said NJEA President Barbara Keshishian in a statement issued yesterday,

We are deeply disappointed that Governor Christie and the Legislature chose to pass a law which so clearly violates the legal rights of school employees and other public employees. Rather than working in good faith to arrive at a negotiated solution to the pension crisis they have created, they chose political grandstanding. They chose to illegally reach into the pockets of active and retired public employees to generate more funding for the pension systems at a time when they are still not making their own full contributions. Taxpayers will pay the price, both in the cost of defending the state’s illegal action and in the time lost when we should be coming up with real solutions to the problems New Jersey’s politicians have created through their irresponsibility with the pension system.

According to the Star-Ledger, another suit has been filed in state court by a Superior Court Judge who says that the reform bill shouldn’t apply to judges because the NJ Constitution says that their pay “shall not be diminished during their term of employment.” The new formulafor determining health care and pension benefits contributions, of course, diminishes net pay for state workers.

No one’s surprised. After all, Moody’s predicted litigation back in March, when it called the proposed legislation “ a credit positive and initial step” to address NJ’s $87.5 billion in unfunded liabilities for pensions and health benefits. Anyway, the Florida Education Association has filed a similar suit against Gov. Rick Scott's reform legislation, arguing that the state cannot impose higher contributions on current employees, only new ones. (See Talking Points Memo for background.) Then there's Wisconsin and Indiana.

What's the alternative? NJ surely can't come up with $87 billion to bankroll the fund any more than we can go back in time and recapture the money spent through Gov. Corzine's 9% benefits increase in 2001 or, for that matter, perform some sort of alchemy to restore the lack of pension payments that date back to the Whitman Administration. The money's not there. The pension system is under water.

Perhaps, as a counterpart to the lawsuit, NJEA should propose a solution to the gap between projected pension payouts and funds on hand. President Keshishan says, "this lawsuit is about basic fairness and justice." However, it's also about money. Got a solution? Here's a guarantee: everyone's listening.